EUR/USD Forecast and Trade Ideas for June 07 2016

Previous trading day:

Fed Chair Yellen was holding a speech in Philadelphia yesterday, providing some valuable information on current state of US economy and potential future Fed actions, on a first place, widely expected increase of interest rates. With respect to potential near-future strengthening of monetary policy, she has noted that gradual rate increase might occur only if conditions are met. Aside from GDP growth, other two Fed policy targets are set to be reaching full employment and inflation of 2% as of yearend. With CPI reaching 1.1% in April and increase in wages and spending, there is high probability that 2% inflation target will be reached. On the other side, labour market figures have been quite mixed, with unexpected drop in nonfarm payrolls to only 38k during May. Fed Chair Yellen commented that labour market data needs careful attention and found payroll data “disappointing”, however seeing other labour market data as more positive. She concluded that there are much more positive economic developments than negative in US economy.

German Factory Orders unexpectedly dropped for -2% during April on a monthly basis after relatively strong output of 1.9% posted for March. Since the beginning of this year factory orders have modestly slowdown reaching -0.1% in January and -1.2% in February. Slowdown trend in mostly evident on a yearly basis, with factory orders reaching -0.5% compared to same period last year, down from 1.7 % posted previously. Released data are also significantly below market consensus.

German Industrial Production: results for April will be released on a monthly basis. After strong industrial output in January of 3.3% m/m, German IP modestly dropped during February to -0.5%m/m and March to -1.3%. Market is expecting to see some improvement in German IP during April of 0.7% on a monthly basis and 1.0% compared to same period of last year. During March IP is increased for modest 0.3% y/y.

Euro Zone Gross Domestic Product: third estimate and final results for first quarter will be released. GDP under second estimate was 0.5% on a quarterly basis and 1.5% on a yearly basis. Market is not expecting any change from previously released data.

US Nonfarm Productivity: final results for first quarter will be released with market expectations on modest improvement of indicator to -0.6% from -1.0% previously posted.

US Unit Labor Cost: final results for first quarter will be released. Market is expecting quite modest change in indicator to 4.0% from 4.1% previously released.

After Fridays strong move to levels of 1.1360 supported by weak nonfarm payrolls data release, currency pair was moving in a range of some 70 pips on Monday, between levels 1.1392 down to 1.1325. Short term support level at 1.1320 has been tested. Without strength to break it, currency pair reverted toward short term resistance level at 1.1390 which has also been tested during yesterday’s trading session.

Next resistance level from 1.1390 is long term resistance at 1.1450 and further 1.16 .

On the opposite side, short term support levels are at 1.1320 and 1.12.

Below are presented some trading ideas for today, based on technical analysis taking into account current level of EUR/USD trend and excluding overnight open positions.

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This entry was posted on Monday, June 6th, 2016 at 8:11 pm and is filed under Euro Dollar Forecasts, Euro Dollar Trade Ideas. You can follow any responses to this entry through the RSS 2.0 feed.
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